Consumer Bankruptcy FAQ’s
1. What is the cost of filing a bankruptcy petition?
The Bankruptcy Court filing fee for a Chapter 7 bankruptcy case is presently $335.00. The filing fee is $310.00 for a Chapter 13 case. The legal fee is determined after the initial consultation, or can be estimated over the telephone. In a Chapter 13 case, much or all of the legal fee can be paid through the Chapter 13 plan.
2. Is the initial consultation free of charge?
3. What is the difference between the different chapters of bankruptcy (Chapter 7, Chapter 11, etc.)?
Most individuals file under Chapter 7 or Chapter 13. Chapter 7 is designed for individuals with limited income and assets who wish to discharge unsecured debts, such as credit cards, personal loans, car loans/repossessions, and medical bills. Chapter 13, which is a monthly payment plan used to repay some amount to creditors, may be used when the assets and/or income of the debtor(s) is/are in excess of what is permitted under Chapter 7. Unsecured creditors are seldom entitled to full payment through a Chapter 13 plan, and in most cases receive only a small percentage of the amount owed. A Chapter 13 is often used to stop a foreclosure action, which can be done as late as the time of the Sheriff’s sale (although we prefer as much advance notice as possible), and cure a mortgage arrearage through the Court-administered payment plan. Chapter 11 is primarily used for corporate reorganizations, and Chapter 12 is designed specifically for family farmers and fishermen who need to reorganize their debts.
4. Does my spouse have to file bankruptcy?
If the debts which need to be discharged are primarily or entirely in the name of only one spouse, both spouses usually do not need to file. Both spouses may nevertheless wish to be present at the initial consultation in order to hear for themselves what effect, if any, their husband’s or wife’s bankruptcy may have on them.
5. Will I be able to retain my home in bankruptcy?
A home can be retained in Chapter 7 as long as the owner(s) do(es) not have too much equity ($21,625 if the home is owned by one person and $43,250 if the home is owned by two people) and the mortgage payments are current. There are also special protections for homes owned by married couples if only one spouse is filing, in which event there may be unlimited equity in the home. The mortgage may be in arrears on the date of the filing of a Chapter 13 bankruptcy petition, and indeed often is, and there may be more equity in the home than is permissible under Chapter 7. However, mortgage payments must be resumed once the bankruptcy petition is filed and any pre-existing mortgage arrears and/or excess equity must be satisfied through the payment plan.